Does an aircraft purchased in Illinois and leased to a foreign commercial airline that flies only between Illinois and a foreign country (never touching another U.S. state) qualify for Illinois's rolling stock sales/use tax exemption?

Plain-English summary

A global aircraft leasing company -- a foreign corporation with no offices or presence in Illinois -- asked the Illinois Department of Revenue for a binding Private Letter Ruling (PLR) confirming that its purchase, in Illinois, of an aircraft under lease to a foreign commercial airline would qualify for Illinois's "rolling stock" sales/use tax exemption. The catch: the lessee airline's flights on that aircraft would occur only between Illinois and a foreign country -- never touching another U.S. state.

The Department declined to issue the requested PLR. Under 2 Ill. Adm. Code 1200.110(a)(4), whether to issue a PLR at all is within the Department's discretion, and the Department can instead respond "by a letter explaining that the request for ruling will not be honored." That's what happened here: the Department declined the PLR and answered with this non-binding General Information Letter (GIL) instead.

But substantively, the Department agreed with the taxpayer. The rolling stock exemption (35 ILCS 120/2-5(13) for the Retailers' Occupation Tax, with a parallel Use Tax exemption at 35 ILCS 105/3-55(c)) applies to property sold to owners, lessors, or shippers that is used by interstate carriers for hire as "rolling stock moving in interstate commerce." The taxpayer argued that an aircraft flying only between Illinois and a foreign country should still count as moving in "interstate commerce," because:

• 86 Ill. Adm. Code 130.340(b)'s definition of "rolling stock" covers vehicles of an interstate carrier for hire, including those crossing "state lines," without excluding international origins or destinations; and
• Denying the exemption to a lessor leasing to a foreign airline -- while allowing it for a lessor leasing to a domestic airline flying between U.S. states -- could discriminate against foreign commerce in violation of the U.S. Constitution's Foreign Commerce Clause, citing Kraft General Foods, Inc. v. Iowa Dep't of Revenue & Finance, 505 U.S. 71 (1992).

The Department agreed: flights in foreign commerce qualify as flights in "interstate commerce" for purposes of the rolling stock exemption. The fact that the aircraft's routes run between Illinois and a foreign country, rather than Illinois and another U.S. state, does not by itself invalidate the exemption.

That conclusion comes with conditions, though. The Department's answer was explicitly qualified: "Assuming that the aircraft otherwise meets the requirements of the exemption ... the fact that the flights are between Illinois and a foreign country, rather than Illinois and another state in the United States does not invalidate the exemption." Those requirements, drawn from 35 ILCS 120/2-51(e), are:

• The carrier must be able to document that it has authority to operate as an interstate carrier for hire; and
• The carrier's books and records must show the aircraft was used to carry persons or property for hire in interstate commerce for more than 50% of its total trips, or more than 50% of its total miles (flight hours may substitute for miles), during a 12-month period -- with the taxpayer electing the trips-or-mileage method at the time of purchase and documenting that election.

In the facts as described, the lessee airline had the appropriate regulatory authority to provide for-hire transport between Illinois and the foreign country, anticipated that nearly 100% of the aircraft's flights would be on that route, and the lease did not restrict the aircraft to that route -- so the Department understood those requirements would likely be satisfied. But the GIL itself does not independently verify or bless those facts; it only explains the rule and notes the Department's understanding of what the taxpayer described.

What this means for you

Aircraft lessors and leasing companies (including foreign entities)

If you're purchasing an aircraft in Illinois that will be leased to an airline flying for-hire routes limited to Illinois and a foreign country, the rolling stock exemption is not automatically unavailable just because the routes never touch another U.S. state. Foreign-commerce flights count as "interstate commerce" for this exemption. You still need to satisfy every other element of the exemption, including the interstate-carrier-for-hire authority and the 50%-of-trips-or-miles test.

Documentation you need in hand

To actually claim the exemption, be prepared to document: (1) the lessee airline's regulatory authority to provide for-hire transportation between Illinois and the foreign country, (2) an election (made at time of purchase) of the trips method or mileage/flight-hours method, and (3) books and records showing the aircraft met the more-than-50% threshold under the elected method over a 12-month period. Consider also whether Form RUT-7-A (Rolling Stock Certification for Aircraft, Watercraft, Limousines, and Rail Carrier Items) should be provided to the seller.

If you're considering requesting a PLR on a novel fact pattern

Requesting a PLR does not guarantee you'll get one. The Department has discretion under 2 Ill. Adm. Code 1200.110(a)(4) to decline a PLR request and respond with a GIL instead, as it did here. A GIL answers general questions about how the law works but is not binding on the Department and is not a statement of Department policy -- unlike a PLR, which is binding as to the requesting taxpayer if the facts are complete and accurate.

Common questions

Q: Did the Department grant the taxpayer's request for a Private Letter Ruling?
A: No. The Department exercised its discretion under 2 Ill. Adm. Code 1200.110(a)(4) to decline the PLR request and instead issued this non-binding General Information Letter.

Q: Does an aircraft flying only between Illinois and a foreign country (not another U.S. state) qualify for the rolling stock exemption?
A: The Department said yes, it can -- flights in foreign commerce qualify as flights in "interstate commerce" for purposes of the rolling stock exemption under 35 ILCS 120/2-5(13) and 35 ILCS 120/2-51(e), so long as the exemption's other requirements are also met.

Q: What other requirements must still be satisfied for the exemption to apply?
A: The carrier must document that it has authority to operate as an interstate carrier for hire, and its books and records must show the aircraft was used in qualifying interstate (including foreign) commerce for more than 50% of its trips or more than 50% of its miles (or flight hours) during a 12-month period, with the trips-or-mileage method elected at the time of purchase.

Q: Is this GIL binding on the Department?
A: No. As a General Information Letter issued under 2 Ill. Adm. Code 1200.120, it is not a statement of Department policy and is not binding on the Department -- unlike the binding PLR the taxpayer originally requested (and was denied).

Q: Does the Use Tax exemption work the same way?
A: Yes. The parallel Use Tax "rolling stock" exemption at 35 ILCS 105/3-55(c) tracks the same interstate-carrier-for-hire, for-hire, rolling-stock, and interstate-commerce requirements as the Retailers' Occupation Tax exemption.

Citations and references

Statutes and regulations cited:

• 35 ILCS 120/2-5(13) (Retailers' Occupation Tax rolling stock exemption)
• 35 ILCS 120/2-51(e) (12-month, more-than-50%-of-trips-or-miles test for aircraft/watercraft purchased on or after Jan. 1, 2014)
• 35 ILCS 105/3-55(c) (parallel Use Tax rolling stock exemption)
• 86 Ill. Adm. Code 130.340 (definition of "rolling stock" and interstate carrier for hire)
• 2 Ill. Adm. Code 1200.110(a)(4) (Department's discretion to decline a PLR request)
• 2 Ill. Adm. Code 1200.120 (GILs are non-binding and not a statement of Department policy)

Case law cited by the taxpayer (Foreign Commerce Clause argument):

• Kraft General Foods, Inc. v. Iowa Dep't of Revenue & Finance, 505 U.S. 71 (1992)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2019.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2019/st19-0020-gil.pdf

Original ruling text

ST 19-0020-GIL 10/04/2019 ROLLING STOCK
Flights in foreign commerce qualify as flights in interstate commerce for the purpose of
the rolling stock exemption. See 35 ILCS 120/2-5(13) and 35 ILCS 120/2-51(e). (This is
a GIL.)
October 4, 2019
Dear XXX:
This letter is in response to your letter dated March 29, 2019, in which you requested
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”)
are issued by the Department in response to specific taxpayer inquiries concerning the
application of a tax statute or rule to a particular fact situation. A PLR is binding on the
Department, but only as to the taxpayer who is the subject of the request for ruling and only to
the extent the facts recited in the PLR are correct and complete. Persons seeking PLRs must
comply with the procedures for PLRs found in the Department’s regulations at 2 Ill. Adm. Code
1200.110. The purpose of a General Information Letter (“GIL”) is to direct taxpayers to
Department regulations or other sources of information regarding the topic about which they
have inquired. A GIL is not a statement of Department policy and is not binding on the
Department.
See 2 Ill. Adm. Code 1200.120.
You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant
to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
On behalf of our client COMPANY (“COMPANY” or the “Company”), we
request the Illinois Department of Revenue issue a Private Letter Ruling with
respect to the factual situation discussed below. Our request is pursuant to 2 Ill.
Adm. Code 1200.110.
We request a ruling to confirm that COMPANY’s
purchase of an aircraft under lease to a foreign airline qualifies for the exemption
provided by ILCS §120/2-5(13). Specifically, we seek confirmation that the
exemption is applicable where the aircraft at issue is utilized by a lessee airline in
providing its commercial transportation services such that the aircraft’s landings
occur in Illinois and a foreign country only.
GENERAL INFORMATION

1. Enclosed please find an original Form IL-2848, Power of Attorney,
   authorizing FIRM to represent COMPANY before the Illinois Department of
   Revenue (the “Department”).

St 19-0020-GIL
PAGE 2
October 4, 2019

2. This Private Letter ruling (“PLR”) request is not submitted with regard to
   hypothetical or alternative proposed transactions. This PLR is requested to
   determine the tax consequences of the actual business practices of the
   Company.
3. The Company is not currently engaged in litigation with the Department in
   regard to this or any other tax matter.
4. The Company is not currently under audit by the Department in regard to this
   or any other tax matter.
5. Department has not previously formally ruled regarding this matter for the
   Company.
6. FIRM, on behalf of COMPANY, submitted a web request to Mr. NAME,
   Technical Assistance Division, on this issue. Mr. NAME replied on July 23,
   2018 as follows: “Based on what I can find in our rules and regulations, so
   long as the trip is originating in Illinois and ending outside of Illinois, or
   originating outside of Illinois and ending in Illinois we would consider that
   interstate, regardless of whether the trip began in a different state or different
   country.” (email correspondence attached)
7. Mr. NAME recommended that my client submit a Private Letter Ruling
   request.
8. The Company requests that certain information be redacted from the PLR
   prior to dissemination to others. The Company requests that its name and the
   name of its employees and representatives be redacted.
9. The Company knows of no authority contrary to the authorities referred to and
   cited below.
   STATEMENT OF MATERIAL FACTS
10. COMPANY is a foreign corporation headquartered in COUNTRY.
    COMPANY, through affiliated group companies, also has a presence in
    COUNTRIES. COMPANY has no offices or presence in Illinois.
11. COMPANY is a leading global aircraft leasing company. COMPANY
    engages in buying, leasing and selling aircraft throughout the world.
12. COMPANY will purchase an aircraft in Illinois that is under lease to a foreign
    commercial airline. The lessee airline will use the aircraft in providing its

St 19-0020-GIL
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October 4, 2019
carrier services for persons and property under the authority of that foreign
government.

4. At the time of purchase, the subject aircraft will be under lease to the airline.
5. The lessee airline anticipates using the aircraft solely on routes from Illinois to
   the foreign country and back.
6. The lessee airline does not anticipate using the aircraft to land anywhere in the
   United States other than Illinois.
7. The terms of the lease with lessee airline do not restrict the use of the aircraft
   to the anticipated Illinois-to-foreign country flight plan(s).
   RULING REQUESTED
   On behalf of the Company, we respectfully request the Department rule that the
   sale of an aircraft to COMPANY, under the conditions described above, is exempt
   of Retailers Occupation Tax pursuant to ILCS § 120/2-5(13).
   RELEVANT AUTHORITIES
   The tax commonly known as the Illinois “sales tax” is composed of the ROT, the
   service occupation tax (“SOT”), the use tax (“UT”), and the service use tax
   (“SUT”). (The SOT and the SUT are not relevant to the transaction at issue as
   those taxes are imposed on transactions involving the sale of services.)
   The Illinois ROT Act imposes a tax on persons engaged in the business of making
   retail sales of tangible personal property. 35 Illinois Compiled Statutes 120/2
   (hereinafter “ILCS”); 86 Ill. Adm. Code §130.101 (hereinafter “ILAC”). In
   accordance with Section 2-10 of the Act, this tax is measured by the seller’s gross
   receipts. 35 ILCS 120/2-10; 86 ILAC 130.101. The legal incidence of the ROT
   falls on the seller, who effects reimbursement by collecting UT from its customer.
   86 ILAC 130.101(d).
   Generally speaking, all sales of tangible personal property, including aircraft, are
   presumed subject to the ROT unless it can be established that the transfer of
   property is incident to a service or an exemption applies. The seller has the
   burden of proving that a transaction is not taxable or otherwise not subject to the
   ROT. 86 ILAC 130.801(f).
   ILCS § 120/2-5(13) sates, in relevant part:

St 19-0020-GIL
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October 4, 2019
“Gross receipts from proceeds from the sale of the following tangible personal
property are exempt from the tax imposed by this Act … (13) Proceeds from sales
to owners, lessors, or shippers of tangible personal property that is utilized by
interstate carriers for hire for use as rolling stock moving in interstate commerce
and equipment operated by a telecommunications provider, licensed as a common
carrier by the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate commerce.” (emphasis
supplied)
ILCS § 120/2-51 [eff. 7-1-2017] states, in relevant part:
“(e) For aircraft and watercraft purchased on or after January 1, 2014, ‘use as
rolling stock moving in interstate commerce’ in paragraph (13) of Section 2-5
occurs when, during a 12-month period, the rolling stock has carried persons or
property for hire in interstate commerce for greater than 50% of its total trips for
that period or for greater than 50% of its total miles for that period. The person
claiming the exemption shall make an election at the time of purchase to use
either the trips or mileage method and document that election in their books and
records. If no election is made under this subsection to use the trips or mileage
method, the person shall be deemed to have chosen the mileage method. For
aircraft, flight hours may be used in lieu of recording miles in determining
whether the aircraft meets the mileage test in this subsection. For watercraft,
nautical miles or trip hours may be used in lieu of recording miles in determining
whether the watercraft meets the mileage test in this subsection.”
A complementary “rolling stock” exemption exists for purposes of the Use Tax.
“To prevent actual or likely multistate taxation, the tax imposed by this Act does
not apply to the use of tangible personal property in this State under the following
circumstances:…… (c) The use, in this State, by owners, lessors, or shippers of
tangible personal property that is utilized by interstate carriers for hire for use as
rolling stock moving in interstate commerce as long as so used by the interstate
carriers for hire, and equipment operated by a telecommunications provider,
licensed as a common carrier by the Federal Communications Commission, which
is permanently installed in or affixed to aircraft moving in interstate commerce.”
(ILCS §105/3-55(c))
ILAC 130.340 states in relevant part:
“a) In addition, notwithstanding the fact that the sale is at retail, the Retailers’
Occupation Tax does not apply to sales of tangible personal property to owners,
lessors, or shippers of tangible personal property that is utilized by interstate
carriers for hire for use as rolling stock moving in interstate commerce as long as
so used by the interstate carriers for hire. [35 ILCS 120/2-5(13)] For example,

St 19-0020-GIL
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October 4, 2019
the exemption may also apply to lessors under leases of less than one year’s
duration and manufacturers who provide tangible personal property (such as
shipping containers) to interstate carriers for hire when those interstate carriers
use that property as rolling stock moving in interstate commerce.
b) The term “Rolling Stock” includes the transportation vehicles of any kind of
interstate transportation company for hire (railroad, bus line, air line, trucking
company, etc.), but not vehicles that are being used by a person to transport its
officers, employees, customers or others not for hire (even if they cross State
lines) or to transport property that the person owns or is selling and delivering to
customers (even if the transportation crosses State lines). ….
c) The rolling stock exemption cannot be claimed by a purely intrastate carrier
for hire as to any tangible personal property that it purchases because it does not
meet the statutory tests of being an interstate carrier for hire.
d) Except as provided in subsection (h) of this Section, the exemption applies to
vehicles used by an interstate carrier for hire, even just between points in Illinois,
in transporting, for hire, persons whose journeys or property whose shipments,
originate or terminate outside Illinois on other carriers. The exemption cannot be
claimed for an interstate carrier’s use of vehicles solely between points in Illinois
where the journeys of the passengers or the shipments of property neither
originate nor terminate outside Illinois.” (emphasis supplied)
And
ILCS § 120/2-5(13)(h)(1)(D) [sic] states:
“Example 1: An interstate carrier uses a truck to carry property for hire from
Springfield, Illinois to Champaign, Illinois where part of that property is
delivered. The carrier continues to Indianapolis, Indiana and delivers part of that
property in that city. The truck then continues to Gary, Indiana and delivers the
remainder of the property in that city. The truck then returns empty to
Springfield, Illinois from the delivery in Gary, Indiana. The truck is considered to
have made a total of four trips (one trip to Champaign, Illinois, one trip to
Indianapolis, Indiana, one trip to Gary, Indiana, and a return trip back to
Springfield, Illinois). If this were all the trips that the truck made within the first
12-month period after it was purchased (or was all the trips that truck made in a
subsequent 12-month period), it would qualify for the test set forth in this
subsection (h) for that 12-month period because it made 3 qualifying trips for hire
that terminated or originated outside of Illinois and only one intrastate trip,
thereby resulting in a percentage of 75% of its total trips during that first 12month period. Any repair and replacement parts purchased for the truck during

St 19-0020-GIL
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October 4, 2019
that first 12-month period would also have qualified for the exemption.”
(emphasis supplied)
Mr. NAME, Illinois Technical Assistance Division, provided the following:
“Some of the examples I was able to find discussed limousines picking travelers
up at O’Hare international airport and delivering them to a hotel in Chicago
qualifying because the trip began outside of Illinois. The references I was able to
find neither specified or excluded international origins or destinations.” (email,
07/23/2018)
DISCUSSION AND ANALYSIS
When the purchaser of an aircraft in Illinois is a lessor, the ROT exemption
provided by ILCS § 120/2-5(13) requires that the following conditions be met:

1. Gross receipt must be from the sale of tangible personal property;
2. The tangible personal property must be sold to an owner, lessor or shipper;
3. The tangible personal property must be utilized by an interstate carrier;
4. The interstate carrier must provide transport “for hire”;
5. The interstate carrier must use the tangible personal property as rolling stock;
   and
6. The tangible personal property must move in interstate commerce.
   We believe the “interstate carrier” requirement can be met where the carrier
   travels between a foreign country and Illinois, even though that travel does not
   involve another US state.
   COMPANY will purchase an aircraft (tangible personal property) which is under
   lease to a commercial airline. That commercial airline has the appropriate
   regulatory permissions to provide “for hire” transportation services for persons
   and cargo between Illinois and a foreign country. It is our position that the
   aircraft qualifies as rolling stock under the definition provided by ILAC
   130.340(b) because the aircraft is a transportation vehicle used by an airline to
   transport persons or cargo for hire while crossing state lines.
   We have been unable to locate a definition of “interstate” carrier or “interstate”
   commerce as applicable to an airline.

St 19-0020-GIL
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October 4, 2019
However, we believe the example in ILCS § 120/2-5(13)(h)(1)(D) [sic] provides
helpful guidance, although directed at determining whether trucks, not aircraft,
qualify for exemption. The example concludes that the truck at issue qualified for
the rolling stock exemption because it made 3 qualifying trips for hire that
terminated or originated outside of Illinois. In determining which of the truck’s
trips were “interstate” the Regulation considers whether the trip originated or
terminated outside of Illinois.
Similarly, we believe the airline at issue here should qualify as an interstate
carrier moving in interstate commerce because each of its trips originates or
terminates outside Illinois. The test for “interstate commerce” does not require
that the trip originate or terminate in another US state. Therefore, the term
“interstate commerce” can apply where an aircraft flies between Illinois and a
foreign country because those flights terminate or originate in the foreign country.
Similarly, a flight that originates and terminates in a US state or states (other than
Illinois) or a foreign country or countries is engaged in “interstate commerce.”
To qualify for exemption, an aircraft must be used more than 50% of the time in
qualifying interstate commerce during a 12-month period. Because the airline
anticipates that nearly 100% of its service flights will originate or terminate
outside Illinois, the aircraft will meet that test. We recognize that the aircraft may
occasionally fly on other routes but it is highly unlikely those routes would
originate and terminate in Illinois. In addition, the aircraft may occasionally fly to
a maintenance and repair location, but those limited flights will not taint the
exemption assuming the 50% test is met.
Our interpretation of the “rolling stock” exemption is also consistent with the
United States constitution’s Foreign Commerce Clause. To permit an exemption
for aircraft purchased by domestic airlines flying between US States, but disallow
the exemption for aircraft purchased by foreign airlines flying only between
Illinois and a foreign country, could result in in discrimination against foreign
commerce in violation of the Foreign Commerce Clause. (see, KRAFT
GENERAL FOODS, INC., Petitioner v. IOWA DEPARTMENT OF REVENUE
AND FINANCE 505 US 71, 112 S Ct 2365, 120 L Ed 2d 59) Similarly,
discrimination against foreign commerce could result if the “rolling stock”
exemption is allowed for aircraft purchases by lessors leasing to domestic airlines
but not for aircraft purchases by lessors leasing to foreign airlines.
CONCLUSION
We respectfully request that the Department issue a ruling stating that, under the
provisions ILCS § 120/2-5(13), the sale to COMPANY of an aircraft located in
Illinois that will be under lease by COMPANY to an airline at the time of the
transaction is exempt of ROT when that airline plans to use the aircraft to provide

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October 4, 2019
for-hire transportation services between Illinois and a foreign country. Such
travel constitutes “interstate commerce.”
In addition, COMPANY will not owe Use Tax on the use of the aircraft, pursuant
to ILCS § 105/3-55(c).
Please also confirm that COMPANY should provide the aircraft seller with a
completed Form RUT-7-A-Rolling Stock Certification for Aircraft, Watercraft,
Limousines, and Rail Carrier Items (attached).
If the Department cannot conclude that COMPANY’s aircraft purchase and use
qualifies for the “rolling stock” exemptions as described above, we respectfully
request that the Department contact the undersigned at (206) 913-4117 to discuss
this matter.
DEPARTMENT’S RESPONSE:
The Department’s regulation “Public Information, Rulemaking and Organization”
provides that “[w]hether to issue a private letter ruling in response to a letter ruling request is
within the discretion of the Department. The Department will respond to all requests for private
letter rulings either by issuance of a ruling or by a letter explaining that the request for ruling will
not be honored.” 2 Ill. Adm. Code 1200.110(a)(4). The Department recently met and determined
that it would decline to issue a Private Letter Ruling in response to your request. We hope
however, the following General Information Letter will be helpful in addressing your questions.
The Retailers' Occupation Tax Act imposes a tax upon persons engaged in this State in
the business of selling tangible personal property at retail to purchasers for use or consumption.
See 86 Ill. Adm. Code 130.101. Use Tax is imposed on the privilege of using, in this State, any
kind of tangible personal property that is purchased anywhere at retail from a retailer. See 86 Ill.
Adm. Code 150.101. These taxes comprise what is commonly known as “sales tax” in Illinois.
Retailers’ Occupation Tax does not apply to sales to owners, lessors, or shippers of
tangible personal property that is utilized by interstate carriers for hire for use as rolling stock
moving in interstate commerce. See 35 ILCS 120/2-5(13). In addition, the Use Tax does not
apply to the use in this State by owners, lessors, or shippers of tangible personal property that is
utilized by interstate carriers for hire for use as rolling stock moving in interstate commerce as
long as so used by the interstate carriers for hire. See 35 ILCS 105/3-55(c).
that:

Further, subsection (e) of Section 2-51 of the Retailers’ Occupation Tax Act provides
(e) For aircraft and watercraft purchased on or after January 1, 2014, “use as
rolling stock moving in interstate commerce” in paragraph (13) of Section 2-5 occurs
when, during a 12-month period, the rolling stock has carried persons or property for hire

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October 4, 2019
in interstate commerce for greater than 50% of its total trips for that period or for greater
than 50% of its total miles for that period. The person claiming the exemption shall make
an election at the time of purchase to use either the trips or mileage method and document
that election in their books and records. If no election is made under this subsection to
use the trips or mileage method, the person shall be deemed to have chosen the mileage
method. For aircraft, flight hours may be used in lieu of recording miles in determining
whether the aircraft meets the mileage test in this subsection. 35 ILCS 120/2-51
In order to claim the rolling stock exemption for an aircraft, the carrier must be able to
document that it has authority to operate as an interstate carrier for hire and show, from its books
and records, that it meets the trips or miles test described in subsection (e) of Section 2-51 of the
Retailers’ Occupation Tax Act. Absent the ability to document that the carrier has authority to
operate as an interstate carrier for hire and actually operates the aircraft in a manner that qualifies
for the exemption, no rolling stock exemption is available.
It is the Department’s understanding that COMPANY’s lessee has the appropriate
regulatory permissions to provide “for hire” transportation services for persons and cargo
between Illinois and a foreign country. It is also the Department’s understanding that aircraft
will meet the trips or miles test under subsection (e) of Section 2-51 of the Retailers’ Occupation
Tax Act. Assuming that the aircraft otherwise meets the requirements of the exemption as set
out above in this paragraph, the fact that the flights are between Illinois and a foreign country,
rather than Illinois and another state in the United States does not invalidate the exemption. In
other words, flights in foreign commerce qualify as flights in interstate commerce for the
purpose of the rolling stock exemption.
I hope this information is helpful. If you require additional information, please visit our
website at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at
(217) 782-3336.
Very truly yours,
Samuel J. Moore
Associate Counsel
SJM:rkn
CC:

Angi Freitag – IDOR

St 19-0020-GIL
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October 4, 2019
ROLLING STOCK: Flights in foreign commerce qualify as flights in interstate commerce for
the purpose of the rolling stock exemption. See 35 ILCS 120/2-5(13) and 35 ILCS 120/2-51(e).
(This is a GIL.)